Basics in Risk Management
A project, no matter in which industry, is a set of interconnected tasks intended to achieve a certain goal, with a particular set of resources, within a fixed duration and budget. Since different tasks are usually allotted different time frames, and produce differing deliverables, any project will, to a certain extent, involve uncertainties. These uncertainties, in turn, might produce events which will impede a project’s successful completion. Assessing the likelihood and adversity of such events, which are collectively referred to as ‘risks’, is what constitutes the practice of risk management. Very few projects actually achieve their pre-defined goals within the budget and time frame. This has to do, above all else, with the occurrence of unexpected events. Risk management in general and in industrial Cannabis projects in particular, is an extremely important aspect of project management which seeks to maximize the chances of success by identifying risks early on and planning how to manage and mitigate them beforehand. When the processes are properly undertaken, most uncertainties in a project can be predicted and their occurrence, impact or damage can be minimized or eliminated. This raises the probability of successful completion within the predefined requirements for performance, cost and duration. Risk management can be applied in any project, regardless of duration or budget.
What Constitutes a Risk in the Cannabis and medical industries?
As we have seen, the concept of risk comprises two factors: the probability of its realization, and the consequences which follow. The nature of such risks varies with their associated areas of activity. For example, risk management in the medical/cannabis/pharmaceutical industries will focus primarily on preventing injury and harm to patients/users, but also on minimizing side effects, minimizing product recalls, maintaining company reputation, and encouraging brand sustainability. On the other hand, a project risk is defined as “an uncertain event or condition that has a positive or negative effect on a project’s objectives.” Basically, risk is any unexpected event that can affect the project — for better or worse. For example in the Cannabis industry, running a project for new cannabis growing and/or production facility which is intended to supply cannabis products to a certain territory, without understating and assessing current regulatory requirements as well as future ones in terms of facilities design, technology and quality may end up with facility that manufacture products that cannot be sold, or if they can be sold, may harm patient and deliver low quality and/or unsafe products.
The Importance of Risk Assessment in Cannabis projects
Cannabis projects risk management is the systematic process of identifying, analyzing and responding to risks, based on prioritization ranking in order to increase the probability and/or the impact of positive events and to decrease the probability and/or the impact of negative ones during the entire Cannabis project duration and until cannabis products are in use by the patients/costumers. A well-executed project hinges on the ability to conduct a thorough assessment of risks prior to the its inception. Carrying out a proper risk assessment will ensure that the cannabis project team members not only know which events to expect, but understand their potential outcomes too and to take an early action for preventing these events from happening and to have an immediate actions and mitigations to handle those who already occurred and to minimize the damage severity or impact. It enables the stakeholders to put together a contingency plan to accept, relocate or reduce the risks in question.
Guidelines for Cannabis Risk Management
This is the process of determining which risks may affect the project. The identification of project risks starts through the use of tools such as:
In addition, dividing the risks to categories can provide a list of areas that are likely to suffer undesired events. Some widely used categories are technical (requirements, technology, performance), external (contracts, suppliers, laboratories), organizational (logistics, resources, budget, human capital), and managerial (planning, schedule, control).
Risk Analysis in Cannabis projects
Once the risks have been identified, they are analyzed to determine the qualitative and quantitative impact of their realization on the project, so that appropriate steps can be taken to prevent, or at least mitigate them. Subsequently, the risks are prioritized by ranking their probability of occurrence against their expected impact.
Risk Exposure (or Risk Score) denotes the value obtained by multiplying a particular risk’s Impact Rating by it’s Risk Probability – the higher the score, the greater the risk. For example, project delays in operating the first extraction processes will be less risky then buying extraction technology that cannot deliver cannabis extraction that will fail external quality control laboratory testing or that the cultivation facility support microbial proliferation of cannabis plant material contamination.
Risk Response Plan in Cannabis projects
For every potential risk identified before we begin the Cannabis project, a trigger must be determined, and a response plan should be devised. Risk response plans are aimed at the following targets:
Successful implementation of a set of response plans will lower a project’s total risk exposure.
Risk Monitoring and Control
In order to manage the risk throughout the entire cannabis project from initial design, through regulatory review, construction and an approved branded cannabis product that will be sold globally, we need to monitor the risk in order to control it from beginning to end.
Risk monitoring and control includes:
Cannabis project risk management summary
Risk management is becoming the most challenging aspect of managing projects in the dynamic and fast changing cannabis industry. This industry is moving from traditional, local and uncontrolled industry to a global, controlled and regulated industry. The future cannabis industry will enable consumers and patients to reach safe, healthy, effective, consistent and pure cannabis products that will pass all release testing which were published by the relevant regulatory body. Applying a simple and efficient risk management process before project initiation will make the difference between project that will have to face uncertainties, delays, additional expenses and failures to a well organized project that will minimize the occurrence for risks, and even if they occurred, we will have a straight forward mitigation in order to mitigate it and to reduce risk impact, enabling us to meet project goals, time lines, budget and most important, business goals.
Risk management not only helps in avoiding crisis situations but also aids in remembering and learning from past challenges mistakes. For example, working with an experienced consultancy and project management company in your project will increase chance of successful project completion and reduces the consequences of those risks. A proper risk management in the cannabis project, using methods such as FMEA or FTA will help to predict the uncertainties in the projects and minimize the occurrence or impact of these uncertainties.
About Cannabis GxP consultancy
Cannabis GXP is an Israel-based consultancy firm working within the cannabis industry.
We are currently engaged in revolutionizing the world of cannabis and hemp cultivation, production and regulation, and are reaching out to growers and manufacturers across the world who wants to join this amazing ride.
We are proud to stand at the forefront of the GMP standards and regulation fields in Israel and worldwide.
Our team is compelled to spread the message of the importance of cannabis regulation and standardization as the world enters a new era of cannabis legislation.
We aim to position our clients with their best foot forward when it comes to anything and everything cannabis related.
We assist companies and growers with facility design, Quality Assurance, Good Practices (GAP/GMP/GLP/GDP), training, and dealing with local and global regulation. Cannabis GXP strives to assist our clients with the development, manufacture and distribution of pharma-grade cannabis products, with a strong emphasis on safety, efficacy, and professionalism.
Cannabis GXP is a subsidiary company of Bio-Chem Ltd. (2007) – a consultancy company for Pharmaceutical, Medical Devices, Cosmetics, and Supplements, based in Israel (http://bio-chem.co.il/en/home/)
Some of our esteemed clients: Teva, Tikun Olam, J&J, Weizmann Institute of Science, BOL pharma, Seach, Nuuvera, Gamma-Cert, Cannabillis, Monsanto, Evogene, Collplant, Sigma-Aldrich, and many more.